Va. doctors make their case
They are lobbying legislators for changes in how benefits, reimbursements are handled

BY TAMMIE SMITH
TIMES-DISPATCH STAFF WRITER
Monday, January 24, 2005

Dr. Dan M. Hoffman explained how one patient told his office staff that she used the health-insurance check she got in the mail to help pay her son's college tuition bill.

Hoffman, a urologist, was at the Virginia General Assembly last week, along with other doctors, lobbying legislators on issues the doctors say threaten their livelihoods.

Rising medical-malpractice premiums is the big issue, but there are others.

In this instance, it is a business practice in which some insurance companies send reimbursement checks directly to patients when the doctor is not in the insurance company's provider network.

The patient is supposed to turn around and pay the doctor -- which most patients do. But not all do.

Hoffman said that when his office staff tried to collect the money the patient owed them -- for medical care the check was intended to pay for -- the patient had declared bankruptcy.

"The hospitals get paid for their charges," said Hoffman, who was at the General Assembly Building on Thursday.

"The provider of services does not get a check."

The issue is one of many that have brought Hoffman and other doctors, dressed in their white lab coats and traveling in small groups, from all over the state to downtown Richmond.

Doctors say the solution is straightforward: Require insurance companies to send the checks to doctors when care has been provided, whether or not the doctor is in the health plan's network. The assignments-of-benefits legislation, Senate Bill 904, introduced by state Sen. Thomas K. Norment Jr., R-James City, would do that.

Most doctors' offices have patients sign a form saying it's OK for the health insurance to pay the doctor directly. Insurance companies generally honor that for doctors in their networks, but they may not for out-of-network doctors.

"You can't run a practice with thousands of dollars not coming in," said Dr. Philip C. Casey, an internist in Fredericksburg who was also at the General Assembly last week.

On the other side of the issue are the health plans, including Anthem Blue Cross Blue Shield, the state's largest health insurer, with about 1.9 million enrolled mem- bers in Virginia, and the health plans' lobbying group, the Virginia Association of Health Plans. Some business groups also oppose the legislation.

The health plans say the legislation would diminish the value of having provider networks, which help control costs. The legislation could also, they say, subject patients to higher costs, as out-of-network doctors can charge patients whatever they want to charge.

"Our concern is this bill threatens the safety net for consumers," said Brooke Taylor, Anthem vice president for corporate communications.

"Health-plan networks are all that stand between consumers and full charges."

Doctors in a network, she explained, agree to accept the fees negotiated by health plans as full payment. Those negotiated rates are often discounted from full charges that a doctor may usually charge. The doctor agrees to the lower charge, often in exchange for a larger volume of patients he or she receives by virtue of being in the network and a preferred provider.

Doctors who refuse to join Anthem provider networks say it's because Anthem does not pay them enough.

That is the issue that prompted a group of 23 emergency- medicine physicians who staff Mary Washington Hospital in Fredericksburg to withdraw from Anthem's network as of Dec. 31.

The doctors still treat Anthem patients, but they do so as out-of-network providers.

Doctors like Casey and Hoffman say Anthem, which recently merged with California-based Wellpoint Health Networks Inc., is using their market dominance to offer doctors less-than- favorable terms.

"Anthem uses it as a tool to unlevel the playing field," Casey said.

It is not a new issue or argument -- doctors and health plans bicker over reimbursement rates all the time. Anesthesiologist Dr. Barry Rose said his group, Commonwealth Anesthesia Associates, with 26 physicians and 35 nurse anesthetists, is trying to work out terms with Anthem.

"We are currently in network, until Feb. 28," Rose said. "We have never been out of network with any major providers. We have worked hard to stay in network. Unfortunately, now what many physicians in Virginia are realizing with the market share Anthem has, you are not able to negotiate. That is why you see a lot more physicians going out of network."

Taylor, the Anthem spokeswoman, say Anthem's networks remain healthy.

Rose is president of an organization called Virginians for Fairness in Healthcare, a coalition of physicians and medical practices that hired a local health-care consulting firm to prepare a background paper on the assignment-of-benefits issue. The review looked at what is happening in other states and what impact such legislation would have in Virginia.

"The first thing it shows is that the other major carriers -- Cigna, Aetna, United Healthcare -- all honor this assignment of benefits," said Bruce B. Donald, administrator at Commonwealth Anesthesia Associates. "Anthem does not."

Rose said the research also showed that there is no evidence that assignment-of-benefits legislation would drive up health- care costs or diminish provider networks.

"The point is fair-market rates," Rose said. "Physicians are not looking to gouge. Physicians are looking for fairness."

Medical practices, he said, are like any small business that faces increasing costs of doing business, including the costs they pay to provide their employees with health insurance.

"We have noticed a 50 percent increase in malpractice premiums over the last year alone," Rose said.

"Like many small businesses, we are hit with insurance- company [premium] rate increases in the double digits. What is surprising to us is physician reimbursements are not going up. We sort of wonder where the money is going."

Officials at the Virginia Association of Health Plans had seen the background paper and say it's flawed. They take issue with many of the paper's points, including the contention that health plans were making excessive profits and giving multimillion-dollar bonuses to executives. "Revenue is not what you should be talking about," said Joy Lombard, director of policy and lobbyist for the Virginia Association of Health Plans.

Nationally, the average profit margin for health plans averaged between 5 percent and 8 percent in recent years, she said, lower than that of many other industries.

Lombard added that not all physicians think there is an issue. In many cases, she said, and Taylor agreed, it's physicians with exclusive practices, such as hospital-based emergency-room doctors or anesthesiologists, providers who do not rely on insurers for patient volume.

"They are the ones with the upper hand already," Taylor said. The emergency doctors in Fredericksburg, she said, have 100 percent of the market.

"Their demand is more than double what is paid other emergency-room doctors in the state," Taylor said.

Emergency-room doctors do not necessarily have an option not to treat someone. Federal laws require hospitals to treat patients who show up with emergencies regardless of their ability to pay.

Anesthesiologists, who put patients under for surgery, face some of the same issues, Rose said.

"When I am in the hospital, I am a physician," he said. "It does not matter what insurance anybody has. I don't even know what insurance they have when they come in."

Neither side would get specific about rates nor was willing to predict how the legislation would fare. A similar bill was introduced in the General Assembly last year but was withdrawn by the bill sponsor. One reason the talks broke down, Lombard said, was over a provision the health plans wanted but the doctors didn't.

That provision would have prohibited doctors from billing patients for any balances over what the insurance companies paid them if honoring assignment-of-benefits forms became mandatory for health plans. That practice, called "balance billing," can drive up patient costs.

The background paper, Rose pointed out, looked at states with mandatory assignment of benefits and did not find that to be the case.

"All we are saying is, yes, we will provide the services," Rose said. "We want patients to have the right to assign their benefits to make the system run smoother."

The legislation, he said, "helps level the playing field between large insurance companies and physicians."

Contact Tammie Smith at (804) 649-6572 or tlsmith@timesdispatch.com